Analysis of Indian Cement Industry
Then various types of cement available in the Indian market, cement industry segmentation and its cost structure are looked at. Next, the key indicators of performance for cement industry are defined. Further, key trends in the cement industry and future growth drivers are identified and are later used in company analysis. The Porter's five forces acting upon the industry are also analyzed. In the second part, AC limited is analyzed and its company profile is created.
It is the second largest cement company in India and has a strong product portfolio. It also augments its services by reaching out to customers via various initiatives like help vans, centers, literature etc. While there has been a fall in its capacity addition ; utilization and asset turnover ratio over the last two years, its turnover per employee has increased. Also, its operating EBITDA, PAT and ROCK have been constantly decreasing from 2009-11 despite there being a constant increase in its capital employed.
It has also been investing heavily in Capacity Additions, M;Ass and R;D. Next, Altercate Cement Ltd, the largest player in Indian cement industry is analyzed. It also has a fairly strong product portfolio and has well distributed presence in southern, central and western part of India. During the lean financial ear of 2011, though its sales fell more than industry average still the fall in its capacity utilization was less than the industry average.
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Merger with Samarium's in 2010-11, increased its net fixed assets and gave it a presence in northern India as well. Due to the merger, its turnover per employee also fell but it may be considered a temporary phenomenon. Post-merger, its ROCK also fell significantly. It has been Analysis of Indian Cement Industry By Rotating comparison of two companies, it is found that though AC is better than Altercate in a number of parameters, Altercate fares better than AC in terms of its total sales, remover per employee and EBITDA.
It is clear from the exhibit that Indian cement industry is a fragmented industry. This is despite a lot of consolidation that happened from 2004-2008 in the form of foreign companies like Holmic, Heidelberg, Leafage etc acquiring domestic players. In fact while the top two companies biz. Holmic Group and Ditty Barilla Group account for 34% of the market hare, bottom 34 companies account for 53% market share. In March 2011, the total installed production capacity of cement manufacturing in India was around 295 million metric tons, out of which 284 million metric tons was accounted for by 172 large cement plants and the rest was attributed to 365 mini cement plants (Crisis Research, 2011).
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